Local Government Units Funding Quiz
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Questions and Answers

Which of the following is classified under service income for local government units (LGUs)?

  • Salary from government employment
  • Lease Income
  • Investment Returns
  • Permit Fees (correct)

What are transfers in the context of funding for local government units (LGUs)?

  • Funds allocated for profit projects
  • General operational funding support
  • Funds provided for specific purposes (correct)
  • Unconditional funds for any purpose

Which of the following is categorized as business income for local government units (LGUs)?

  • Transfers from General Fund
  • Permit Fees
  • Subsidy from National Government
  • Fines and Penalties - Business Income (correct)

Which type of funding refers to money received by local government units (LGUs) without a specific purpose?

<p>Subsidies (C)</p> Signup and view all the answers

Which of the following includes fees and charges associated with inspections conducted by local government units (LGUs)?

<p>Inspection Fees (D)</p> Signup and view all the answers

What is the minimum number of suppliers needed for a purchase amounting to P1,000?

<p>3 suppliers (D)</p> Signup and view all the answers

Which document does the Property Inspector use to indicate the acceptance or rejection of delivered items?

<p>Inspection and Acceptance Report (IAR) (D)</p> Signup and view all the answers

What does the Stock Card (SC) record?

<p>Quantities of all receipts and issuances of inventory (D)</p> Signup and view all the answers

What action does the Accounting Division take after receiving the Inspection and Acceptance Report (IAR)?

<p>They record the accepted deliveries in the books of accounts (D)</p> Signup and view all the answers

What document is prepared by the Property/Supply Division to request the issuance of items available in stock?

<p>Requisition and Issue Slip (RIS) (B)</p> Signup and view all the answers

What is the purpose of the Report of Supplies and Materials Issued (RSMI)?

<p>To update the Stock Card and assist in journalizing (C)</p> Signup and view all the answers

Which two divisions reconcile their records as an internal control?

<p>Property/Supply Division and Accounting Division (B)</p> Signup and view all the answers

What is the main purpose of an allotment issued by the Local Chief Executive?

<p>To allow departments to incur obligations within the appropriation. (C)</p> Signup and view all the answers

What must obligations be accompanied by to be considered valid?

<p>A certificate signed by specific local government officials. (D)</p> Signup and view all the answers

What is the accounting entry for appropriations in the annual budget of a local government unit?

<p>Debit to Appropriations – Annual Budget, Credit to Legislative Appropriations (C)</p> Signup and view all the answers

Which registry is NOT mentioned as one for maintaining appropriations?

<p>Registry of Appropriations, Allotments and Obligations – Equipment Purchases (D)</p> Signup and view all the answers

Which document is issued to perform a comprehensive release for a department?

<p>Local Budget Matrix (LBM). (C)</p> Signup and view all the answers

What is the accounting entry to take up the release of allotment?

<p>Debit to Released Current Allotment and credit to Current Allotment. (D)</p> Signup and view all the answers

How should updates to the registries be managed?

<p>Registries must be updated for every change or addition in appropriations. (B)</p> Signup and view all the answers

How are supplemental budgets recorded?

<p>They are documented similarly to the annual budget using journal vouchers. (A)</p> Signup and view all the answers

What limits the amount recorded in the books for a local government unit?

<p>Annual appropriations for various expenses. (C)</p> Signup and view all the answers

What is the significance of the Certification on Appropriations, Funds and Obligation of Allotment (CAFOA)?

<p>It certifies the existence of an appropriation and verifies fund availability. (D)</p> Signup and view all the answers

What must be documented when a realignment of budget items occurs?

<p>Changes are reflected in the Registry of Appropriations through an ordinance. (B)</p> Signup and view all the answers

What type of fund does the Local Disaster Risk Reduction Management Fund include?

<p>Quick Response Fund (D)</p> Signup and view all the answers

Which of the following is NOT classified as an obligation?

<p>Projected revenues expected in the next fiscal year. (B)</p> Signup and view all the answers

In case of a re-enacted budget, what is required for documentation?

<p>The re-enacted budget should be recorded in the registries. (B)</p> Signup and view all the answers

What form is used to effect the release of reserve amounts?

<p>Allotment Release Order (ARO). (C)</p> Signup and view all the answers

Which of these registries is specifically for tracking financial expenses?

<p>Registry of Appropriations, Allotments and Obligations – Financial Expenses (A)</p> Signup and view all the answers

How are the amounts recorded in the General Journal upon receipt of an allotment release order?

<p>As a debit to Released Current Allotment and a credit to Current Allotment. (B)</p> Signup and view all the answers

What is maintained in separate sets for current and continuing appropriations?

<p>Registries (A)</p> Signup and view all the answers

Which obligation must be fulfilled specifically for Metro Manila Development Authority contributions?

<p>5% contributions for LGUs in NCR. (A)</p> Signup and view all the answers

Which of the following is NOT a component of the Registry of Appropriations, Allotments and Obligations?

<p>Grants and Subsidies (C)</p> Signup and view all the answers

What is included in the estimates of income for the fiscal year?

<p>Estimates of revenues from both local and external sources (B)</p> Signup and view all the answers

Which of the following is NOT a local source of revenue?

<p>Assistance and subsidy (A)</p> Signup and view all the answers

What is the purpose of a journal voucher prepared by the Accounting Office?

<p>To record the estimates of income, revenues, and receipts (D)</p> Signup and view all the answers

What does the term 'appropriation' refer to in local government finance?

<p>Authorization made by ordinance for payment from funds (B)</p> Signup and view all the answers

Which component is essential for disclosing the financial condition of the local government unit?

<p>All essential facts regarding long-term obligations (D)</p> Signup and view all the answers

What should be recorded in the Registry of Estimates and Actual Income, Revenues and Receipts (REAIRR)?

<p>The details of estimates of income, revenues, and receipts (D)</p> Signup and view all the answers

Which of the following does NOT fall under external sources of revenue?

<p>Receipts from Non-Tax Revenues (B)</p> Signup and view all the answers

What type of obligations must the budget include details about?

<p>Bonded and other long-term obligations (B)</p> Signup and view all the answers

What does the 'credit' to the appropriate estimated income group accounts signify in the accounting process?

<p>Increase in estimated income (A)</p> Signup and view all the answers

Flashcards

Purchase Order (PO)

A formal document that acts as a contract between an organization and a supplier, outlining the terms and conditions of a purchase.

Delivery Receipt (DR)

A document acknowledging the receipt of goods by the buyer from the supplier.

Inspection and Acceptance Report (IAR)

A report used by the Property Inspector to document the inspection and acceptance (or rejection) of delivered goods.

Stock Card (SC)

A record maintained by the Property/Supply Division that tracks the quantities received, issued, and available for each item in inventory.

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Supplies Ledger Card (SLC)

A record maintained by the Accounting Division that tracks both the quantity and monetary value of inventory receipts and issuances.

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Disbursement Voucher (DV)

A document used by the Property/Supply Division to initiate the payment process for approved purchases.

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Requisition and Issue Slip (RIS)

A document prepared by end users to request the issuance of inventory items from stock for their specific needs.

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Share from Internal Revenue Collections (IRA)

A portion of the collected Internal Revenue allocated to local government units (LGUs).

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Service Income

Income generated by LGUs through different services they provide to the public, such as permits, registrations, inspections, and certifications.

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Business Income

Income earned by LGUs from business operations, including schools, transportation, waterworks, and other facilities.

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Transfers

Funds given to LGUs from other sources for specific purposes, such as projects or disaster relief.

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Subsidies

Funds transferred to LGUs without a specific purpose, often provided by higher levels of government.

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Budget Transmission

The process of submitting the proposed budget to the appropriate authorities, including estimates of income and expenditures.

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Estimated Expenditures

The projected expenses necessary to carry out the local government's functions, projects, and activities for the upcoming fiscal year.

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Long-Term Obligations

Financial commitments made by the local government unit that extend beyond the current fiscal year, such as bonds or loans.

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Estimated Income Sources

The anticipated revenue that the local government will collect during the fiscal year, divided into local and external sources.

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Local Revenue Sources

Income generated within the local government, including tax revenue and non-tax revenue.

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External Revenue Sources

Income coming from outside the local government, such as shares from taxes or government-owned corporations.

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Appropriation (Budget)

An authorization granted by ordinance that allows the local government to spend public funds for specific purposes or under specific conditions.

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Accounting for Income Estimates

Recording the estimated income, revenues, and receipts in the local government's accounting system, using specific account classifications.

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Registry of Estimates (REAIRR)

A record that lists the details of estimated income, revenues, and receipts, and compares those estimates to actual realized income.

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Journal voucher for annual budget

A document used to record the initial allocation of funds for the local government's annual budget.

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Appropriations – Annual Budget

An account that represents the total amount of funds allocated for the year.

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Legislative Appropriations

The account that represents the authority granted by the legislative body to spend money.

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RAAOCO

Registry of Appropriations, Allotments and Obligations – Capital Outlay. A record of funds allocated for infrastructure and long-term assets.

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RAAOPS

Registry of Appropriations, Allotments and Obligations – Personal Services. A record of funds allocated for salaries and benefits.

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RAAOMOOE

Registry of Appropriations, Allotments and Obligations – Maintenance and Other Operating Expenses. A record of funds allocated for day-to-day expenses.

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RAAOFE

Registry of Appropriations, Allotments and Obligations – Financial Expenses. A record of funds allocated for interest payments, debt repayment, and other financial costs.

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LDRRMF

Local Disaster Risk Reduction Management Fund. A special fund dedicated to preparing for and responding to emergencies.

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Realignments of budget items

Adjustments made to the original budget allocation. These changes can increase or decrease funding for specific items.

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Re-enacted Budget

A budget that is carried over from the previous year if a new budget is not approved.

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What is the initial budget limit?

The initial budget limit is determined by the annual appropriations for salaries, statutory obligations (like contributions and benefits), debt service, and essential operating expenses authorized in the previous year's budget.

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What happens after the annual budget is approved?

After the annual budget is approved, adjustments are made by subtracting the previously recorded amount from the approved annual budget.

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What is an Allotment?

An Allotment is an authorization issued by the Local Chief Executive (LCE) to a department/office, allowing them to incur obligations for specified amounts within the appropriation ordinance.

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What is the Local Budget Matrix (LBM)?

The Local Budget Matrix (LBM) or Local Budget Execution (LBE Form No. 1) is used to effect the comprehensive release of funds for a particular department/office.

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What is an Allotment Release Order (ARO)?

An Allotment Release Order (ARO) or LBEF No. 2 is used to release reserve amounts or amounts for later release, including appropriated amounts under the needing clearance of the LBM.

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How are Allotments recorded?

The Accountant records allotments by drawing a journal voucher in the General Journal and Registries of Appropriations, Allotments, and Obligations.

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What are Obligations in Local Government?

Obligations are commitments to pay for lawful expenditures made by an accountable officer on behalf of the local government.

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What documents are needed to record Obligations?

A certificate signed by the local budget officer, local accountant, and local treasurer is required to record obligations. This certificate shows that an appropriation exists, the estimated expenditure is obligated, and funds are available.

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What is a CAFOA?

A Certification on Appropriations, Funds and Obligation of Allotment (CAFOA) form is used to record Obligations. It has six copies and is prepared by the Head of the Requesting Unit.

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What is the importance of tracking Allotments and Obligations?

Tracking Allotments and Obligations ensures the proper management of local government funds and prevents overspending.

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Study Notes

Introduction to Revenues and Receipts

  • Revenue is the gross inflow of economic benefits or service potential during a reporting period, resulting in an increase in equity, excluding contributions from owners.
  • Revenue includes only inflows received or receivable by the entity in its own account.
  • Receipts refer to actual cash collections from all sources during a reporting period.

Fundamental Principles for Revenue

  • All revenues of an entity are remitted to the National Treasury and included in the General Fund of the National Government, unless otherwise specified by law.
  • All moneys and property received by a public officer (in any capacity) are considered government funds and property, unless otherwise stated by law.
  • Amounts received in trust or from business-type activities of the government may be separately recorded and disbursed according to relevant rules.
  • Receipts are recorded as revenue for Special, Fiduciary, or Trust Funds (or other than the General Fund) only with authorization from law.
  • Collecting officers must issue official receipts (ORs) when collecting payments of any kind.
  • Temporary receipts are not used for public funds.
  • Pre-numbered official receipts (ORs) are used in strict numerical sequence.
  • Duplicate ORs must be exact copies of the original.
  • Government funds are not used for encashing private checks.
  • Receipts are acknowledged according to law, with a noted date of receipt with source and purpose.

Types of Funds

  • General Fund: used for any purpose not specified for other funds.
  • Special Fund: designated for particular purposes.
  • Trust Fund (Fiduciary Fund): held by a government agency or officer as a trustee, agent, or administrator for specific fulfillment.
  • Revenue Fund: includes all funds derived from government agency income, used for appropriation/expenditures as per law.
  • Depository Fund: held in an authorized depository bank, remaining under the recipient agency's control.
  • Special Account in the General Fund (SAGF): is used to fund priority government actions, and is sourced from specified fees, grants, and donations.
  • Special Purpose Funds (SPFs): are funds allocated by the President for special programs and projects; not under the accountability of a particular government agency.

Relevant Provisions of Law

  • Money collected for a special purpose is considered a special fund, used solely for that purpose.
  • If the purpose of a special fund is fulfilled or abandoned, any remaining balance is transferred to the general funds of the government.

Exchange Transactions

  • Revenue from exchange transactions arises from selling goods or providing services to third parties (including government entities).
  • Examples of revenue from exchange transactions include fees, licensing fees, school fees and sales revenue.
  • Revenue from the use by another entity of assets. (interest, royalties, and dividends)

Recognition of Revenue

  • Sale of Goods: Revenue is recognized when significant risks and rewards of ownership transfer to the buyer, the entity does not retain continued managerial involvement or effective control, it is probable that economic benefits will flow to the entity, and revenue and costs are measurable reliably.

  • Rendering of Services: Revenue is recognized on a straight-line basis over the period the services are rendered. It can be recognized by reference to the stage of completion, if the outcome can be reliably measured.

Non-Exchange Transactions

  • Revenue from non-exchange transactions includes taxes, fines, penalties, gifts, donations, and goods in kind (received without providing equal value).
  • Revenue is usually recorded on a cash basis.

Fines and Penalties

  • Fines and penalties are recognized as income when collected.
  • Recognition criteria for assets applies.

Gifts, Donations, and Goods in Kind

  • Recognized as revenue when future economic benefits are probable and when conditions are met.
  • No conditions = immediate recognition
  • With conditions = recognized as liability, then revenue when conditions fulfilled.

Services in Kind

  • Are not recognized as revenue due to inability to control service and measure at fair value.
  • Includes technical assistance, volunteer services and community-based works.

Assets, Liabilities, and Revenue Measurement

  • Assets: measured at acquisition-date fair value
  • Liabilities: measured at present value (when time value is considered)
  • Revenue: measured as increase in net assets.

Debt Forgiveness

  • If a lender cancels a government entity's debt, the debtor recognizes revenue equal to the carrying amount of the cancelled debt.
  • If a controlling entity cancels the debt of a wholly owned entity, the debt is treated as a contributor and not revenue.

Bequests

  • Bequests are measured at the fair value of the goods or service received.

Grant with Conditions

  • An asset received with conditions is initially recognized as a liability, with revenue recognized upon fulfillment of conditions.

Concessionary Loans

  • If a loan proceeds is below market value, the difference is recorded as revenue.
  • If the LGU has a current obligation, the difference is recognized as a liability that is recognized as revenue when satisfied.

Other Receipts

  • These include subsidies from the national or local government, or from various agencies (with specific receipts).

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PA310 Public Accounting and Budgeting Module AY24-25 PDF

Description

Test your knowledge on the different types of income and funding for local government units (LGUs). This quiz covers various aspects such as service income, transfers, and business income classifications. It also includes questions about procurement processes and document management within LGUs.

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